Why they need to focus on a more robust asset-liability management framework and diversify their borrowing mix.
Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) have grown strongly, especially in the last three to four years. The share of NBFCs and HFCs in the total credit system has been steadily rising—from 15.2 percent in FY14-15 to 19.2 percent in FY18. This growth was partly due to the slowdown in lending by banks, particularly public sector banks (PSBs), and partly due to the model of these entities, built on quicker response times and last-mile connectivity.
With 11 PSBs under the Reserve Bank of India’s (RBI) Prompt Corrective Action (PCA), there has been some pressure on the supply of credit. The overall credit growth of banks under PCA was negative for the three financial years up to FY17-18. Some amount of the credit demand in the economy, therefore, got channelled to NBFCs and HFCs, leading to the increase in their share in overall credit.
Interest rates have been falling from 2014 till late-2017. Mutual funds (MFs) are an attractive option for investors in such a scenario. Hence, assets under management (AUM) for MFs witnessed a significant growth, rising by about 75 percent between March 2016 and March 2018, and adding more than 9 lakh crore. A significant part of this came in the year after demonetisation. Commercial papers (CP, short-term borrowings of up to 90 days) issued by NBFCs to MFs increased from about 50,000 crore in March 2016 to 1.2 lakh crore in September 2018.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Home-Cooked Meal Is Now Greatly Valued
The pandemic has also brought with it an improved focus on hygiene, use of technology in dining, rise of cloud kitchens and resurgence in popularity of Indian ingredients
Paytm 3.0 - Reaching Near Breakeven In Two Years
As of 2020, Vijay Shekhar Sharma’s super app for financial services had run up losses in thousands of crores. Now, as digital payments gets yet another boost courtesy Covid-19, he’s hopeful of reaching near breakeven in two years
THE PANDEMIC HAS CAUSED WOMEN GREATER LABOUR PAIN
Covid-19 has shown that women are more likely to face the brunt of job losses than men, and find fewer opportunities when they want to resume. That apart, several have to deal with increased hours of unpaid work at home and even domestic abuse
LEADERSHIP WILL BE ABOUT SEEING THE BIGGER PICTURE
Leaders must not only guard their teams first during a crisis, but also deal with stakeholders with respect and dignity. And apart from pursuing business goals, they should remain committed to our planet and the environment
PHILANTHROPY SHOULD BE HUMBLE, BUT NOT MODEST
Apart from building a flexible and resilient framework for the future, philanthropists, civil society and the government must work in tandem so that every rupee is absorbed on the ground
INTEGRATED HEALTH CARE, TECH WILL DISRUPT SECTOR
While clinical research will get a boost, having a skilled workforce and public spending on health care will be challenges in the near term
DIGITALISATION WILL HELP IN VALUE CREATION
As the pandemic brings technology and innovation to the core of business and daily life, the next decade will see about 150 million digital-first families in India
Industry 4.0: Climate Revolution?
Augmenting sustainability alongside digital capabilities is an economic, competitive and global opportunity for India’s businesses, but regulations need to reflect intent
EV Dream Still Miles Away
Electric vehicles have remained a buzzword in India for years. But not much has moved on ground due to high upfront costs, range anxiety and charging infrastructure
Living Waters
A virus has caused us to scramble for oxygen but our chokehold on the environment is slowly strangling the very waters that breathe life into us. The virus is a timely reminder: We are merely consumers, not producers of life’s breath on this planet
